Corporate Social Responsibility in Israeli Industry: Uncovering the Determinants
(הגורמים המשפיעים על אחריות תאגידית בתעשייה הישראלית)

126 Pages Posted: 12 Mar 2016 Last revised: 27 Sep 2016

See all articles by Orr Karassin

Orr Karassin

Department of Sociology, Political Science and Communication- Open University of Israel

Aviad Bar-Haim

Open University of Israel

Date Written: March 10, 2016

Abstract

English Abstract: 1. In recent years, self-regulation of industry has become commonplace in many regions and policy fields. Corporate Social Responsibility (CSR) initiatives in general and reporting schemes in particular are increasingly accepted as means of corporate governance. In the broad and varied research on CSR several leading streams can be identified: (a) CSR theory building defining CSR and explaining its emergence of CSR. (b) a related strand of normative research dedicated to the benefits and drawbacks of CSR activities; (c) reporting, performance, and advancing of tools for measurement and assessment of CSR; and (d) empirical investigation of factors and mechanisms that bring about CSR performance at firms. Our study belongs to the latter stream.

2. We construct a multilevel explanatory model, combining interdisciplinary strands of CSR research aimed at assessing the causes and mechanisms effecting CSR performance at firms. Our model includes four levels of analysis. (a) The institutional level examines the effects of institutional pressures from regulators and external stakeholders. (b) The organizational layer examines corporate culture, various characteristics of industrial profile, and role of management. (c) The individual level looks at the positions and attitudes of employees toward their respective companies and managers. We address job satisfaction, organizational commitment, and organizational citizenship behavior. (d) The performance level deals with CSR practices, behaviors, and outcomes. CSR performance is assessed through the construction of a set of scales incorporating six thematic areas of CSR: economic, environmental, social, labor relations, product responsibility, and corporate governance.

3. We test the model in the rather CSR-arid setting of the Israeli industrial sector. To the best of our knowledge, this is a first attempt to empirically study CSR in Israel. Israeli industries are generally perceived as lagging behind global CSR 3 reporting trends,1 and as such may provide a unique view of both the possibilities of CSR and the barriers to its adoption. Moreover, the regulatory environment in Israel does not place overt pressure on the industrial community to adopt beyond-compliance measures, and demands from various stakeholders, such as the banking and insurance industries, are not sufficiently evolved.

4. The model, tested in the unique setting of the Israeli industrial sector, highlights the importance of both outer and inner environments of firms (through the different levels of the model) in advancing CSR performance. It allows us to discern the influencing factors from the weaker links that do not contribute significantly to the advancement of CSR at industrial firms in Israel.

5. The institutional level has been found to be weak in relation to both stakeholders and dominant Israeli regulators. Although some stakeholder groups are more influential than others (e.g., customers and employees relative to financial institutions), the effect of the stakeholders as a whole on performance is low to null. This is partially explained by the fact that stakeholders' demands for CSR are not clearly articulated or sufficiently encompassing to be understood widely as indeed referring to CSR. Regulators assessed at the institutional level (the Ministry of Environmental Protection and The Ministry of Economics) both contribute only minimally to CSR performance. Although regulators do pressure firms in various ways, their actions (such as licensing, inspecting, monitoring, and enforcing) are focused on achieving compliance. Therefore, both their potential and actual effect on beyond-compliance CSR performance is low.

6. The organizational level, which includes a variety of elements, provides mixed results with respect to mechanisms affecting CSR performance. Organizational culture is a dominant explanatory factor, but the industrial profile, which includes numerous characteristics, is not a significant one. Organizational culture, specifically goal–driven, competitive, innovative, and communitarian cultural modes are found to be highly correlated with performance. At the same time, managerial attitudes and behaviors show mixed results and moderate correlation with performance. Significant are managerial reports concerning 1 Regardless of whether reporting reflects actual performance. 4 actions taken rather than statements or perceived importance of CSR by managers. Finally, leadership styles are not differentiated in our study. Consequently, leadership is found to have only minimal explanatory power of CSR performance in the current research setting.

7. Finally, the individual level is found to have the strongest explanatory value for CSR performance. Both job satisfaction and organizational commitment exhibit strong correlations with performance, whereas organizational citizenship behavior is found, contrary to expectations, to be insignificant in predicting performance.

8. Research findings demonstrate the potential usefulness of a multilevel analysis of CSR, not only within the specific context of the study but on broader scale. A particularly dominant attribute of multilevel analysis is its ability to identify weak links in the mechanisms and processes that inform and promote CSR. Multilevel analysis facilitates a holistic view of both the firm's internal and external environments, making possible a solid comparative analysis that takes into account the variations in contextual settings. As such, the model can prove useful in identifying and comparing the mechanisms that are deficient or not fully developed in different contexts, taking into account variations in the identity and profile of businesses and sectors, as well as the national or local context.

תקציר בעברית: במחקר חלוצי וניסיוני על אחריות תאגידית (Corporate Social Responsibility – CSR) בתעשייה הישראלית, נבדק מודל לניבוי גורמים להתנהגות אחראית (או בלתי אחראית) של תאגידים. אחריות תאגידית נמדדה בשבעה תחומים: אחריות כלכלית, אחריות סביבתית, אחריות ביחסי עבודה וניהול משאבי אנוש, אחריות חברתית, אחריות למוצר, ממשל תאגידי ותוכניות התנדבותיות. מנבאים פוטנציאליים, אשר זוהו לפי הספרות המחקרית נערכו במודל רב-ממדי בעל שלושה רבדים: הרובד המוסדי השפעת האסדרה (רגולציה) והשפעת בעלי עניין; רובד ארגוני- עצמת המנהיגות בארגון, תרבות ארגונית עמדות והתנהגות מנהלים בארגון ביחס לאחריות תאגידית ומגוון מאפייני פרופיל ארגוני כגון תחרותיות בשוק, מוכוונות ליצוא, מיקום גיאוגרפי ועוד; רובד אישי- מחויבות עובדים לארגון, שביעות רצון של עובדים והתנהגות אזרחית ארגונית. בניתוח סטטיסטי (המוצג בדוח ראשוני) נמצא שלרובד המוסדי כושר ניבוי נמוך של אחריות תאגידית. לרגולטורים בחברות התעשייה שנחקרו (משרד הכלכלה ומשרד הגנת הסביבה) ישנן דרישות רגולטוריות וכוח אכיפה המופעל כלפי המפעלים והמכוון להשגת ציות. ואולם, נראה שהגורם המוסדי הזה אינו מצליח להשפיע באופן ממשי על אחריות תאגידית, המתבטאת ברובה, בהתנהגות שהיא מעבר לציות. בעלי העניין, אף הם, משפיעים רק מעט על ביצועי האחריות התאגידית, ככל הנראה מאחר שדרישותיהם מהתאגיד אינן נוגעות לאחריות תאגידית. למשתני הרובד הארגוני השפעה מעורבת על ביצועי האחריות התאגידית. בולטת בהשפעתה הרבה היא התרבות הארגונית - במיוחד דפוסי תרבות מכווני מטרה, חדשנות, תחרותיות וקהילתיות, שנמצאו כקשורים לאחריות תאגידית. לבסוף, לרובד האישי כושר ניבוי משמעותי. מחויבות ארגונית ושביעות רצון מהעבודה נמצאו בעלי מתאם גבוה עם ביצועי אחריות תאגידית. לממצאים של המחקר יש משמעות תיאורטית והשוואתית ביחס למדינות אחרות, אך גם משמעות מעשית ויישומית. עם זאת, נדרשים מחקרים נוספים ובהיקפים גדולים יותר כדי לבסס את מסקנות המחקר הראשוני מסוגו בישראל.

Keywords: corporate social responsibiliy, regulation, institutional level, organizational level, individual level

Suggested Citation

Karassin, Orr and Bar-Haim, Aviad, Corporate Social Responsibility in Israeli Industry: Uncovering the Determinants
(הגורמים המשפיעים על אחריות תאגידית בתעשייה הישראלית) (March 10, 2016). Available at SSRN: https://ssrn.com/abstract=2745765 or http://dx.doi.org/10.2139/ssrn.2745765

Orr Karassin (Contact Author)

Department of Sociology, Political Science and Communication- Open University of Israel ( email )

1 University Road
Tel-Aviv, 61392
Israel

Aviad Bar-Haim

Open University of Israel ( email )

1 University Road
Tel-Aviv, 61392
Israel

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